United States: A Second Look At Eye-Drop Litigation

Just two days ago, Bexis lowered the
boom on the Third Circuit's recent decision in Cottrell
v. Alcon Labs, ___ F.3d ___, 2017 WL 4657402 (3d Cir. Oct. 18,
2017). In a 2-1 decision, the Cottrell court permitted the
plaintiffs to proceed on the notion that making eye drop drips
bigger than they have to be is a consumer protection violation. To
Bexis's eyes, that decision was blind to the lack of standing,
the absence of any "substantial economic injury," and the
FDA's non-approval of eye drop drips of the "smaller"
size plaintiffs claim it is somehow illegal not to make under state
law. It turns out that there is someone else out there even more
unhappy with the Cottrell decision than Bexis: the defendant. Now
we have the defendant's Petition for Rehearing and Rehearing En
Banc,
https://www.druganddevicelawblog.com/wp-content/uploads/sites/30/2017/11/Cottrell-rehearing-petition.pdf
which makes an insightful and compelling case for undoing the
panel's decision.

Two preliminary matters are worthy of comment before we tell you
what the Petition said. First, we have been so unkind about the
Third Circuit's error in the Fosamax case that we
managed to attract the attention of the excellent CA3 blog. In that blog, the author wondered
whether our dissection of Fosamax was perhaps a bit more
violent than necessary. The author also wondered whether we were
coming close to accusing the court of bad faith. Yes to the former,
but definitely No to the latter. As we told the CA3 blog, we took
issue with what we saw as bad reasoning, but never-ever thought
there was any bad faith. (The CA3 blog was generous enough to print
our disclaimer. Thanks for that.) By and large, we are mighty proud
of our home circuit. We know several of the judges, and every one
of them is honorable, hard-working, and much smarter than we are.
Sometimes we are not going to agree with the court's decisions.
Luckily for us we work in a profession and live in a country where
debate and criticism are allowed. Second, succeeding on a petition
for rehearing and rehearing en banc is not easy. When we clerked
for Ninth Circuit Judge William Norris, it seemed there was a
presumption against such petitions. Who wants to admit they were
wrong? And yet we remember one time our judge was on a panel where
things strayed from the norm. Another member of the panel (who will
remain unnamed) loved to decide cases before oral argument and
draft a memorandum disposition rather than a bench memorandum. This
judge prided himself on having almost no backlog. He pushed for
deciding a particular contract dispute via a mere memorandum
disposition, not a published opinion, because he saw the issues as
being too obvious and insignificant for the Federal Reporter. And
so a memo dispo issued. But then the losing party filed a petition
for rehearing that was not only insistent, but it made a lot of
sense. We met with our Judge in his chambers to talk it over. The
telephone rang. It was the third member of the panel, who began by
saying, "Bill, I think maybe we got one wrong." The two
judges confabbed, and then set about persuading the third to change
his mind and change the outcome. It took some arm-twisting, but in
the end, justice was done. A mistake led to a proud moment. By the
way, the Ninth Circuit Judge who called our Judge was Anthony
Kennedy. He is now on the U.S. Supreme Court. So whenever we hear
criticisms of Justice Kennedy for fence-sitting, or for grounding
some of his opinions in "the right to define one's own
concept of existence, of meaning, of the universe, and of the
mystery of human life" or, much worse, international law, we
recall his extraordinary integrity and modesty, and how he was
supremely interested in getting things right.

Back to the Cottrell Petition. The main points in favor
of revisiting the Third Circuit's decision are that it is
contrary to Finkelman v. National Football League, 810
F.3d 187 (3d Cir. 2016), it "radically expands Article III
standing," and that it directly conflicts with Eike v.
Allergan, Inc., 850 F.3d 315 (7th Cir. 2017).
Moreover, the plaintiff's inherently speculative theory of
injury in fact was rejected by federal courts in Massachusetts and
Missouri. (When a court comes out with a more pro-plaintiffy
position than courts in Massachusetts and Missouri, that's
really saying something.) That theory was also rejected by the
district court in Cottrell. And then the Third Circuit
reversed that rejection.

Remember that the Cottrell plaintiffs did not claim
that the medications caused them physical harm or were ineffective
in treating their eye conditions, or that the defendants
misrepresented or omitted any information about the medications or
the number of doses expected. Rather, the plaintiffs simply insist
that smaller eye drops would have cost them less. How is that any
different from the Third Circuit's earlier, controlling
Finkelman case, where the plaintiffs had purchased two
Super Bowl tickets on the resale market for $2,000 each, and
contended that the National Football League had violated New
Jersey's ticket law by not offering at least 95% of tickets to
the general public and instead withholding most tickets for league
insiders? The plaintiff in Finkelman alleged that the
NFL's conduct had caused him injury by reducing the supply of
tickets, thereby driving up the cost of tickets on the resale
market. The Third Circuit in Finkelman held that the
plaintiff lacked standing because the injury was wholly
speculative. Sure, maybe the NFL's withholding of tickets
increased prices on the resale market, but "it might
also be the case that it had no effect on the
resale market," and indeed tickets might even have been more
expensive in plaintiff's hypothetical resale market, as members
of the general public may have greater incentives than league
insiders to resell at high prices. (We have to admit that, as
residents of Philadelphia, where the local team has the best record
in the entire NFL, the availability of Super Bowl tickets is a
much, much bigger issue to us right now than the size of eye
drops.)

The Petition makes the point that, just as in
Finkelman, other market effects might have produced a
result very different from what the plaintiffs theorized. In
Cottrell, the plaintiffs essentially presumed that the
defendants price their products solely according to volume, such
that "changing the eyedropper size would not change the price
of the medicine, while extending the useful lifespan of each
bottle, driving down [the plaintiffs'] aggregate costs."
But it is just as likely that use of smaller drops would prompt use
of different sized containers, or that smaller drops would result
in a higher price – because of more doses – for the
same container. Who knows? All we do know is that the allegations
of the complaint do not "affirmatively and plausibly" add
up to an "injury" caused by the defendant's
conduct.

The Petition nicely captures the absurdity of the Third
Circuit's analysis, under which consumers suffer Article III
injury from "unfairness" whenever they "walk into a
supermarket and buy a product — from toothpaste, to ketchup,
to deodorant, to hairspray — so long as they can then
conceive of a way that the product might be dispensed more
efficiently." The Petition also nicely exposes the weakness in
the Third Circuit's effort to distinguish away the Seventh
Circuit decision in Eike. According to the
Cottrell majority, Eike "seemed to
begin its standing analysis with a determination that the
plaintiffs had 'no cause of action.'" But while it is
true that the Seventh Circuit did (correctly) conclude that the
plaintiffs had "no cause of action," the Seventh Circuit
also separately held that there was no Article III injury, without
ever suggesting a causal connection between the two. Eike,
850 F.3d at 318. The Seventh Circuit got it fundamentally right
when it held that the fact that a seller does not sell the product
that you want, or at the price you'd like to pay, is not an
actionable injury; "it is just a regret or
disappointment."

As residents in, and fans of, the Third Circuit, the
Cottrell decision certainly is cause for "regret and
disappointment." We called this post a "second look"
at the eye-drop litigation. It is the second look we have taken at
the Cottrell case. We hope that the Third Circuit takes a
second look.

This article is presented for informational purposes only
and is not intended to constitute legal advice.

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